From hail-pummeled tarmacs to ghost GPS signals, the aviation sector is facing a turbulent mix of new and escalating risks, and insurers are being forced to rethink how they underwrite the skies.
Steven Godfrey (pictured), head of aviation at HDI Global SE's Canadian branch, said that climate volatility, cyber threats, and a new generation of technology-dependent pilots are among the top concerns for underwriters going into 2025. While general aviation (GA) remains in a soft market cycle, the severity and complexity of potential losses are rising – and Godfrey warned that market conditions may not stay benign for long.
“We’re seeing some more extremes of weather of late,” he said, noting that natural catastrophes are no longer isolated events but increasingly systemic risks for airports and aircraft owners.
Events like hailstorms, where multiple aircraft suffer damage while exposed at the airport, underscore the potential for accumulation losses, he says. Smaller regional airports, often hosting fleets of light GA aircraft parked at open-air tie-downs, are especially vulnerable to hail, wind events, and microbursts that can affect dozens of aircraft in minutes, Godfrey points out.
Wildfires, he added, represent another growing threat. With aircraft frequently stored in non-hardened areas, an encroaching wildfire that crosses an airport boundary could damage or destroy several aircraft in a single incident. “Should a fire cross an airport boundary, you can have a number of aircraft damaged all at once,” Godfrey said.
Beyond climate, technological reliance is creating a different kind of challenge. Pilots increasingly depend on automation and sophisticated avionics, but those systems are not immune to failure.
“That technology can become unavailable in flight,” Godfrey said, raising concerns about pilots trained exclusively on digital systems who may be left disoriented if GPS or navigation systems go offline mid-flight.
The threat of cyber interference is also becoming more tangible. Godfrey highlighted a rise in incidents involving “ghost GPS” signals, where aircraft systems are misled or manipulated by malicious actors.
Disruptions to booking systems and flight planning infrastructure represent a broader systemic risk that insurers and operators can’t ignore, he said.
While risk complexity in aviation is increasing, the insurance market serving it is still sitting in a relatively soft position – at least for now. According to Godfrey, general aviation remains in a phase of high capacity and downward pricing pressure, despite headline-making airline losses elsewhere in the industry.
Aviation insurance tends to follow well-known cycles, from soft to hard and back again, and at present, the GA sector is at the bottom of that curve. While some signs of stabilization are emerging, Godfrey emphasized that the outlook remains fluid.
“From our view at HDI, there is the appearance that maybe there’s some stabilization,” he said, but current conditions are still dominated by abundant capacity. Underwriters are contending with relatively high capacity on well-managed, loss-free accounts – creating intense competitive pressure and limiting the ability to raise rates.
However, that dynamic could begin to shift. Though losses from high-profile airline incidents haven’t yet made a measurable impact on the GA space, Godfrey noted that the ripple effects of those events could eventually bring about market tightening – particularly if capacity begins to retract or reinsurance costs climb.
“The reductions are still available,” he said, referring to pricing on GA accounts, “but the scale of those reductions is slowing.” For underwriters, this slowing could be a signal to begin holding the line on rates in order to maintain long-term sustainability.
Still, predicting a market hardening at this stage would be premature. Godfrey cautioned that most of the key renewal activity (both for major airlines and reinsurers) takes place in the fourth and first quarters. “If we’re going to see a hardening, we’re probably going to have to see somebody pull out [of the market],” he said. “There’s going to have to be a retraction in capacity, or there’s going to have to be an increase in expense, which would be driven by reinsurance.”
Until then, the GA insurance space is likely to remain highly competitive (at least in the short term) while underwriters wait for clearer signals on where the market is headed. As Godfrey put it: “There’s a lot of head scratching happening right now.”
While broader forces such as climate volatility and geopolitical instability continue to shape risk, Godfrey believes one factor looms largest in shaping the current aviation insurance landscape: capacity.
“If you wanted me to put my finger on the one thing that is driving the current state of the market, it is 100 percent the capacity,” he said.
That abundance of capital has helped maintain soft market conditions in general aviation, even amid emerging risks and ongoing claims volatility. But it has also created underwriting challenges, particularly when trying to maintain discipline and long-term sustainability.
At the same time, underwriters like Godfrey are navigating increasingly complex operational exposures, especially as more Canadian operators engage in humanitarian missions in high-risk areas. These missions often require aircraft to fly into conflict zones or regions with geopolitical instability, exposing them to heightened threats.
“We’re supporting our clients as they try to provide this vital lift,” Godfrey said. But that support also comes with necessary risk management. Insurers are placing tight restrictions on operations in volatile zones, such as limiting ground time or prohibiting overnight stays. “No overnights, no more than three hours on the ground in a hot spot,” he said, describing typical policy terms.
These constraints are part of a broader effort to balance partnership with protection. “We like to think of ourselves as partners with [our clients]… providing value means finding solutions that work for them as well as just for us,” Godfrey said.
Even outside of conflict zones, Godfrey said his team is taking a closer look at “ground-based exposures”, a key concern given the growing frequency of climate-related events. He noted that non-flying incidents now account for as much as 30% of losses in some portfolios, underscoring the importance of how and where aircraft are stored.
“We look for things like aircraft storage,” he said, adding that insurers are increasingly encouraging the use of hangars or other sheltered facilities when aircraft are not in use.
